SSH w/public key ibm/ubuntu to mac/snow leopard

I've been using ssh for a month or two, but I'm stepping up to public keys. Today I was finally able to get a public key working from my mac book pro /w snow leopard at work to my ibm thinkpad /w Ubuntu, but I can't seem to go the other way. I checked the port of my mbp and it is open.

I think it's something with the configs. There are many configs on the client and the server and I didn't really get it until after all my fussing around today in them trying to get this working. I edited the system wide sshd_configs before coming to realize I should have made a user ssh config in .ssh for everything and left the system wide stuff alone with factory defaults. So now I just want to start with clean server configs on the mac (probably a good idea to do it on Ubuntu too) and start over this time going through the man ssh_config pages.

Regardless I'm suprised I have not been able to connect I've disabled many security features I felt might get in the way =/. Not certain but it might have something to do with the version of the mac ssh server? Makes me want to just substitute apple's implementation with the portable openssh package. It's really messing up with the head to be comparing something like sshd_config between Ubuntu and what is on Snow Leopard.

Anyways here's the verbose output of trying to connect. Note I changed the actual user name & ip address.

One consistent thing is I have not been able to overcome the "ssh_connect: needpriv 0" error.

Before I forget I also consistently get an error connecting to my ibm from my mac, it says something along the lines of "Tunnel could not be established" or something like that. I don't get it cuz I'm looking at my prompt immediately after that error and I'm logged in to the ibm.